LONDON, Jan 2 (Reuters) – Euro zone manufacturing ended 2014 on a subdued note as output, new orders and employment all recorded sluggish growth, a survey showed on Friday, adding to pressure on the European Central Bank to boost the economy.

Also of concern to policymakers, who are struggling to nurture growth and ward off deflation, the survey showed factories cut prices for the fourth month running and activity was weak in Germany, Europe’s largest economy.

The downturn also deepened in France, the bloc’s second-biggest economy.

“Euro zone factory activity more or less stagnated again in December, rounding off a year which saw an initial, promising-looking upturn fade away and stall in the second half of the year,” said Chris Williamson, chief economist at survey compiler Markit.

Markit’s final December manufacturing Purchasing Managers’ Index stood at 50.6, down from an earlier flash reading of 50.8 but beating November’s 17-month low of 50.1.

That is above the 50 mark that separates growth from contraction, but there was little sign of any improvement this month, with the subindex for new orders at just 50.2, leading factories to barely increase headcount in December.

An output index, which feeds into a composite PMI due next Tuesday that is seen as a good indicator of growth, fell to 50.9 from the flash reading of 51.2, which matched November’s final figure. December’s final figure was the lowest since June 2013.

Williamson said the weakness, coupled with muted service sector growth signaled by mid-December’s flash PMI, pointed to fourth-quarter economic growth of just 0.1 percent.

Increasing fears that plunging oil prices may send the bloc into a deflationary spiral, alongside a stagnating economy, will push the ECB to buy sovereign debt early in 2015, a Reuters poll showed last month. [ECILT/EU]

“Expectations have risen that the ECB will also announce more aggressive policy stimulus in the New Year once it has had time to assess current policy initiatives,” Williamson said.

NEW YORK, Nov 26 (Reuters) – A high-profile $2.02 billion
leveraged loan for Tibco Software is the latest US
buyout deal that has been forced to add expensive perks to
attract buyers as risk-averse investors hold out for better
terms amid a market correction.

Tibco increased its loans by $70 million to finance a deeper
discount. The company also increased the interest margin on the
loan and made other concessions designed to tempt investors into
the deal, bankers said.

Loan buyers are treading cautiously after a volatile October
saw interest margins on US leveraged loans widen by 100-150
basis points (bp) as the equity markets took a hit and the
federal government warned on leveraged lending.

US regulators are clamping down on risky loans and have been
taking a tougher line on deals that fall outside leveraged
lending guidelines, which say that deals should not have
leverage of more than six times debt to Earnings Before
Interest, Tax, Depreciation and Amortisation (EBITDA).

Tibco’s high level of indebtedness at eleven times debt to
EBITDA, according to Moody’s, gave investors enough ammunition
to ask for higher compensation, bankers said.

The $2.02 billion loan backing the company’s $4.3 billion
buyout by Vista Equity Partners was underwritten by JP Morgan
and Jefferies. The financing package totalled $2.97 billion and
also included a high-yield bond.

As Jefferies is not a commercial bank, it is not subject to
the same regulatory scrutiny and was therefore able to offer
more leverage by adding around $200-400 million to the loan then
an earlier financing offer.

KKR, which also participated in Tibco via Merchant Capital
Solutions, a capital markets business that it created with the
Canada Pension Plan Investment Board and Stone Point Capital,
and also underwrites its own buyouts with banks, is also not
subject to the same scrutiny.

Unregulated lenders have played a bigger role in many highly
leveraged deals this year as traditional investment banks have
been forced to bow to regulators’ demands. [ID: nL3N0SC51C]

INVESTOR DEMANDS

Investors currently have the upper hand on deals that are
considered to be weaker credits amid the market correction,
which is removing some of the more aggressive terms and
conditions seen in the first half of 2014.

“They (investors) will use as much leverage as they can get
because they know it will disappear,” an investment banker said.

Tibco increased pricing on the term loan to 550bp over Libor
from original guidance of 450bp over Libor and the Original
Issue Discount (OID) was deepened to 95 percent of face value
from 98.5-99.

The company also increased the size of its term loan by $20
million to $1.67 billion from $1.65 billion and an asset sale
bridge loan by $50 million to $350 million from $300 million to
fund the bigger discount, bankers said.

Investors also asked Tibco to remove an 18-month most
favored nation sunset clause, which keeps pricing level between
new and old debt, and cut the size of incremental debt
facilities that it can add to existing debt.

Tibco is one of several companies that have recently had to
alter pricing and terms in the weaker market that followed
October’s volatility.

This has proved expensive for borrowers and arranging banks
which can share the cost of the adjustments, that in many cases
can bring losses.

International software product group Micro Focus
priced a $1.275 billion term loan B at 425bp over Libor in early
October, 100bp higher than the proposed 325bp over Libor and
widened the discount to 95.5 from 99.

A $500 million term loan C also priced 75bp higher at 375bp
over Libor and the discount was widened to 95 from 99.5. The
company also removed its most favored nations sunset clause.

Abaco Energy Technologies priced a $175 million term loan in
mid-November at 700bp over Libor, up from 575bp over Libor. The
discount was also widened to 94 from 99 and included most
favored nation for the life of the loan.

“When the market’s really good every deal kind of sails
through. When the market’s weaker it’s easier for accounts to
push back on some of the things that they don’t like,” Ptashek
said.

A report from the Shared National Credit (SNC) review in
October, which followed warnings from the regulators to comply
with the leveraged lending guidelines may have contributed to
the market’s weakness in November, Ptashek said.

“The most recent SNC review – when combined with the
letters sent to banks at the end of the summer – really made
people think, wow these guys are really very serious on this,”
Ptashek said.

The US leveraged loan market stayed open, but is running at
lower levels of activity as banks digest regulators harsh
criticism of their leveraged lending practises.

“The wildcard is how the leveraged lending guidance will
play out. Things are getting done. They’re just getting done
wider,” Ptashek said.